Investor mortgage products sold to Fannie Mae or Freddie Mac require a down payment ranging from 10% to 25% with an investor fee ranging from 1.5 to 3 points. Please understand that these investor fees are imposed by Fannie and Freddie and are not charges from either your lender or your broker. However, the investor fee allows using conventional rates. These conforming investor mortgage products are available as either fixed rate or an ARM. Even with the investor fees, these investor mortgage products can be a good choice if your goals are to maximize cash flow and you plan to hold the property for a 3 to 5 year period. Ratios are normally 28/36, but with automated underwriting, excellent credit and some liquid reserves, it is not uncommon to see back ratios in the middle 40s. Rental income is decreased by a 25% vacancy factor but there are underwriting methods which eliminates this issue for experienced investors.
The Investor Mortgage Specialty program (actually a growing group of investor mortgage programs) allows purchase or refinances with only 5% equity. The program allows up to 20 properties plus your home. Ratios are generally 34/40 and a No Documentation investor mortgage is available.
NEW! 100% investor mortgage financing is now available with fairly reasonable rates. These programs have been available for a while, but at extremely high rates compared to market rates.
I have an investor mortgage based on the LIBOR or MTA Index. One feature of the program is four repayment options. Decide to amortize the loan for 30 or 15 years, a minimum amount, or interest only. You can choose every month and have the flexibility to manage cash flow as never before!
Many of my clients are converting from fully amortizing payments to an interest only approach with a lower monthly payment. I have some extensive information availableRead more to see if this powerful tool could work for you.
Read more about Investor Mortgage Closing Costs
I have a page on how to calculate your qualification ratios.
I have a page on documentation requirements for an investor mortgage.
Here are my thoughts on the difficulty of "flipping" investor properties.
For the the greatest flexibility, you may be interested in the Cash Flow ARM.
I have a page on how to properly compare different investment property that may be helpful to you
If the building you are looking at contains 5 or more units, you need commercial loans
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As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come. Read more about this free, no obligation service.